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Reforming tax systems - the World Bank record in the 1990s


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  • Barbone, Luca
  • Das-Gupta, Arindam
  • De Wulf, Luc
  • Hansson, Anna


The main constraint on world Bank operations in tax and customs administration is the Bank's inadequate institutional framework for accumulating knowledge from loan operations, concludes this review of the Bank's record on reform of tax systems in the 1990s. The Bank's theoretical basis for reforming tax and customs administration is still rudimentary. Recent theories stress the importance of institutions that harness voice and improve transparency and contestability, but there is little evidence that reform of these factors alone makes tax administration more effective. Improvements are needed in pre-project diagnosis and project design, especially for examining accountability, administration costs, managerial autonomy, performance incentives for staff, taxpayer equity and services, and environmental factors. Pre-project work could draw more systematically on lessons from previous experience. Institutional components of project design have been biased toward organization, manpower upgrading, and procedures related to information technology. Too little attention has been paid to improving accountability, administrative cost-effectiveness, and anticorruption institution-building. Projects have made inadequate use of different kinds of performance indicators, with little uniformity in those applied. Methods used to evaluate project outcomes could be better and more uniform. Suggestions for future Bank operations: 1) doing better background work and articulating a strategy and comprehensive framework for Bank involvement in reform of tax administration. 2) Possibly supporting and strengthening regional tax administration associations, which could serve as catalysts for change. 3) Strengthening partnering and supporting private sector consultant organizations, so they can manage major components of administrative reform. 4) Institutionalizing the accumulation of knowledge about tax administration (which might require changing staff recruitment, the mix of staff skills, and training plans). The authors provide recommendations for improving project diagnosis, design, performance indicators, and appraisal, as well as a short list of projects that serve as guides to good practice.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2237.

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Date of creation: 30 Nov 1999
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Handle: RePEc:wbk:wbrwps:2237

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Keywords: Enterprise Development&Reform; Decentralization; Public Sector Economics&Finance; Banks&Banking Reform; Municipal Financial Management; Banks&Banking Reform; National Governance; Public Sector Economics&Finance; Municipal Financial Management; Tax Policy and Administration;


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  1. Joel Slemrod & Shlomo Yitzhaki, 1996. "The Costs of Taxation and the Marginal Efficiency Cost of Funds," IMF Staff Papers, Palgrave Macmillan, vol. 43(1), pages 172-198, March.
  2. McMahon, Gary, 1997. "Applying economic analysis to technical assistance projects," Policy Research Working Paper Series 1749, The World Bank.
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Cited by:
  1. Raballand, Gael & Marteau, Jean-François & Mjekiqi, Edmond & Cantens, Thomas, 2009. "Could a well-designed customs reforms remove the trade-off between revenue collection and trade facilitation?," Proceedings of the German Development Economics Conference, Frankfurt a.M. 2009 28, Verein für Socialpolitik, Research Committee Development Economics.
  2. James Alm & Mir Ahmad Khan, 2008. "Assessing Enterprise Taxation and the Investment Climate in Pakistan," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0810, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  3. Jorge Martinez-Vazquez, 2006. "Pakistan: A Preliminary Assessment of the Federal Tax System," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0624, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  4. Devesh KAPUR & Richard WEBB, 2000. "Governance-Related Conditionalities Of The International Financial Institutions," G-24 Discussion Papers 6, United Nations Conference on Trade and Development.
  5. Fjeldstad, Odd-Helge, 2013. "Taxation and development: A review of donor support to strengthen tax systems in developing countries," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).


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